There are two ways to learn some things; the first option is to learn from people who are successful at that thing or those who are failures at that thing. Either way you choose, there is lot to learn from the two sides.
It’s been proven over time that the fastest way to become successful in anything is to model successful people in that area of life. The millionaires are not an exception to this rule.
To fast track your financial success, you need to manage your money the way rich people manage their money. The truth is that, wealthy people manage their money differently from the rest of us.
Scott Fitzgerald wrote in “The Rich Boy” – “Let me tell you about the very rich. They are different from you and me.”
I’m talking about the truly wealthy, the well-heeled, the haves, the 1%. Compared to peasants like you and me, they have entirely different ways of making, spending and saving money. It feels like they have some secret knowledge that comes courtesy of their wealthy bloodlines.
It’s not an exact science, but for most part, rich people manage their money a certain way and poor people manage their money a completely different way, and those ways of money management determine their results.
Still, without owning their riches, you can follow their best financial practices.
How to Manage Your Money Like a Millionaire
Here are some ways you can manage your money like a millionaire — without spending like one.
1. Invest Automatically
Millionaires invest. Investing is the secret to becoming wealthy. Millionaires have a common routing which they follow in four steps. They save early, save often, invest and never stop.
Many of those who are wealthy today started saving small amounts of money and kept saving throughout the ups and downs of their careers and lives.
Today, investing has been simplify and automated. Though you don’t have in-depth knowledge of investing. You can use many available tools to start your investment portfolio.
In fact you can start investing for as low as $5 dollars on Stash
Manage your money like a millionaire by saving and investing automatically.
2. Buy And Hold
Well-known billionaire and philanthropist Warren Buffett has popularized the “buy-and-hold” strategy that so many emulate. Followers of this strategy believe so strongly in investing that they do it as a matter of course. They do it for the long term, holding onto their investments for years.
“If they buy good companies, buy them over time, they’re going to do fine 10, 20, 30 years from now,” Buffett once told CNBC.
3. Get Help
Millionaires get professional help. The rich have flying squadrons of accountants, financial planners, insurance agents, tax consultants, attorneys, bankers and stockbrokers to work their voodoo and maximize their money for them.
In the Rich Dad’s Guide To Investment – Robert Kiyosaki explains that most people play the game of business and investing as individual while the rich plays as team. He explains that you cannot be good at every aspect of the B-I Triangle, that’s the reason you need a team.
If you really want to manage your money like a millionaire you should learn to outsource the things you’re not good at. Many successful people got that way by delegating the tasks to others for which they aren’t necessarily best suited, like handling their financial planning efforts.
Delegating to a professional can help you stay on track and avoid making expensive mistakes while you tend to your busy life.
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4. Take Advantage of Tax Laws
Millionaires use the system to their advantage. They make sound investment decisions that factor in tax implications. They also funnel money into tax-free or tax-deferred funds.
An interesting fact I want you to note is that; you actually pay more in tax than most millionaires. Come to think of it, the Starker 1031 Tax-Free Exchange, allows real estate investors to trade like-kind investment properties with limited or no tax consequences.
Millionaires can sell properties at profit running into millions of dollar without actually paying a cent in tax. How much do you pay in tax from your non-millionaire’s salary?
To manage your money like a millionaire, learn how to use tax laws to your advantage.
5. Invest in Real Estate (No, You Don’t Need Millions)
Millionaires own stuff. They diversify their portfolios. They invest in tangible assets like real estate that can produce income and grow in value over time.
A “tangible asset,” by the way, is just a thing you own that has a physical form. This covers everything from land to gold bullion to your cousin’s beat-up used Honda Accord.
Diversifying your assets is a way to hedge against risk, Matthews said, because the value of tangible goods is separate from the fluctuating value of the stock market.
The key is not putting all your eggs in one basket, Matthews said. Owning real estate has real benefits.
Owning a diversified portfolio of things like stocks and bonds can include real estate as a diversification tool. Many wealthy people do own physical real estate for the purposes of income, future appreciation and tax benefits.
As stated earlier the tax advantage you get when you invest in real estate, makes it an idea investment. In the United State you can take advantage of the Starker 1031 Tax-Free Exchange, which allows you to trade like-kind investment properties with limited or no tax consequences.
Here is good news, do you know you do not need millions of dollars to start investing in real estate. In fact, Barbara Corcoran of The Corcoran Group, New York; wrote in her book that she actually started are real estate business with $1000.
Like any other business, creativity is very important to your success. Believe me, sometimes start up with little capital can be a blessing.
6. Know Your Way Around Credit and Debt
Millionaires know how to use credit and debt to their advantage.
Successful people know the difference between good debts and bad debts as well as good credits and bad credits. Equipped with this knowledge, they make good financial decisions which further strengthen their wealth.
For example, someone who’s used to dealing with large sums of money might feel more comfortable getting a short-term personal loan to start their own business. Or more comfortable picking up a second mortgage to acquire some rental property.
On a good note, try to learn ways you can use credit and debt strategically like the millionaires. (no harms! At least it moves us closer to being one of them.)
7. Keep Your Eyes Peeled for a Good Deal
Millionaires can be surprisingly frugal. They’re not necessarily big spenders. They live below their means so they can save and invest the difference.
It’s like my father always used to tell me: How do you think they got rich in the first place?
Rachel Sherman, professor of sociology conducts research on the affluent. She interviewed 50 wealthy people who either worked in finance or had inherited millions.
“The people I talked with never bragged about the price of something because it was high,” Sherman wrote in the New York Times. “Instead, they enthusiastically recounted snagging bargains on baby strollers, buying clothes at Target and driving old cars. They critiqued other wealthy people’s expenditures.”
8. Crack a Book
Making investment decisions, analyzing financial report, money management are few out many skills people need to be successful but the most painful thing is that this vital skills cannot be learnt in school.
So, here is the question; how do the rich learn all these?
The answer is simple – they read!
Millionaires read, and not just for pleasure. They read to gain information. They know that information is power.
There are lots of secrets hidden in books, including the secrets to manage your money like a millionaire.
I know you are a good reader and you’re doing this right now! Yaaay, you! But, you can take it to the next level by reading more. Get yourself a list of books you must read on weekly, monthly and yearly bases.
Self-made millionaire Steve Siebold interviewed more than 1,200 of the world’s wealthiest people over three decades. He noticed they all had one thing in common: They self-educated by reading.
“Walk into a wealthy person’s home, and one of the first things you’ll see is an extensive library of books they’ve used to educate themselves on how to become more successful,” Siebold wrote in his book, “How Rich People Think.”
If you are on a low budget for books now you can simply buy e-book from Istiga Books or read this blog regularly for up to-date information. We try our best to give the best of financial education freely.
You’re self-educating by reading at this very moment, just like a real rich person!
Wrap It Up!
There is a saying “success comes by association.” In my own opinion I think the best way to phrase that statement is “success comes by imitation.”
You may not be able to associate with Warren Buffett, Bill Gate or the likes of Donald Trump. But, it’s quit easy for you to imitate them. You can manage your money or you business like anyone of them.
All you need is to find their winning formula, and put it into use in your own life.
Over To You
So, what are the other advises, tips, strategies, techniques or methods that have worked for you? Please share with us in the comment below. Believe me; I sincerely value your opinion more than mine.
And don’t forget there is love in sharing!
See You At The Top!!!
The Money Mix is a resource dedicated to money and personal finance. Our mission is to create a healthy conversation about strategies to make and save money, build wealth and how to achieve life-changing goals through taking control of your life.